Army Corps of Engineers exploring new ways to finance missions

Jared Serbu reports.

The Army Corps of Engineers says the massive nationwide inventory of civil works
infrastructure it's charged with managing is rapidly deteriorating. With
insufficient funding coming from Congress to fix the problems, the Corps is
looking for new ways to pay for the work it needs to do.

Lt. Gen. Thomas Bostick, the commanding general of the Army Corps of Engineers
(USACE), said the problems are symptomatic of a more general, multi-decade decline
in public infrastructure spending. While politicians have spent some time
focusing on roads and bridges, that's less true for the sorts of things the Army
Corps handles, most of which are focused on water infrastructure.

In a 2013
assessment, the American Society of Civil Engineers graded the condition of
the 15,000 miles of the country's levees as a D-. The nation's inland waterways,
most of which are managed by USACE, received the same grade. Dams, 707 of which
the Corps runs, didn't do much better with a grade of a D. Ports fared a little
better, with a C grade.

"We're seeing this every day in the execution of our mission. The infrastructure
is slipping in its ability to deliver consistent and reliable services," Bostick
told reporters Thursday. "Since 2000, we've had a 50 percent increase in the
downtime of our hydroelectric equipment. Since 2009, delays and interruptions have
more than doubled on our inland waterway locks and dams. And 16 percent of our
dams are categorized as 'extremely' or 'very high' risk, which increases the
urgency for dam safety work."

$23 billion shortfall

Bostick said the Corps is upgrading and repairing its aging infrastructure, but
it's also clear that its appropriations won't be enough to get the job done.

A 2013 review of the Corps' capital needs found it had a backlog of $60 billion in
recapitalization projects, but that the past several years' budgets had only
funded those projects at a rate of about $2 billion per year.

Bostick said the Corps is spending those limited dollars on its most urgent
priorities, but even the projects it is working on this year will require another
$23 billion to finish.

"That gives you some idea of how long our current projects will take at the pace
we're getting appropriations," he said. "We can only do so much through process
efficiencies. We're going to have to work together in public-private partnerships
to find some alternative financing means that come from outside the federal
government."

USACE still is in the early stages of its thinking about how to use private
capital to pay for public works programs.

Private financing for public
purposes is not an entirely foreign concept for the military. After Congress let
DoD privatize the housing on its bases, the initiative was
widely hailed as a success for having dramatically improved living conditions for
service members without additional government funding. The Army Corps has had a
significant role in writing contracts for the Army Energy Initiatives Task Force,
under which private companies pay for the installation of renewable energy systems
on Army bases.

But Bostick said Army Corps' search for nongovernmental financing will be
difficult. Some of its current operations have the potential to generate revenue
for outside investors, but that's not true across its entire portfolio of
responsibilities.

For example, USACE already collects fees from shipping companies that use the
harbors it maintains, but deriving income from earthen levees, which protect
farmland and suburban communities from seasonal flooding, requires a bit more
imagination.

"We have to find a way to monetize the things we want the private sector to invest
in," Bostick said. "At the end of the day, they need to make a profit, and we have
to find ways to set up long-term contracts that will allow them to accrue benefits
based on the investments they make."

Bostick also suggested his agency would like Congress to let it keep more of the
revenue it already generates. Each year, USACE collects tens of millions of
dollars in recreational fees from boaters, campers and picnickers who visit lakes
and other public lands the Army Corps manages. As of now, most of that money goes
directly to the Treasury, he said.

"Could the Corps of Engineers keep some of that money? Could we work as partners
with the marinas and small businesses in our recreation areas? Those are the kinds
of questions we're asking, but we're in the early stages of it," Bostick said.